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MARKET WRAP SEPT. 30, 2016: CRUDE OIL, DEUTSCHE BANK DRIVE VOLATILE MARKET
7/26/2017 6:46:22 PM
HOME : STOCKS : MARKET WRAP SEPT. 30, 2016: CRUDE OIL, DEUTSCHE BANK DRIVE VOLATILE MARKET
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By Fund Library News Wire  | Friday, September 30, 2016


By Mike Keerma

North American stock markets advanced marginally on the week, closing an uninspiring and volatile September, but posting solid third-quarter gains overall. Last week saw markets react to signs that Opec may implement a production cap in coming months. Crude oil prices surged by $3 per barrel on the week, climbing 7.4% to US$47.98 per barrel, lending support to the flagging S&P/TSX Composite Index, which nevertheless managed to eke out a 0.2% gain on the week. Rumors swirling about the financial stability of German banking giant Deutsche Bank AG also abated by the end of the week, as the S&P 500 Composite Index rallied to end the week with a hairline advance of 0.2%, while the Nasdaq Composite Index edged up 0.1% on the week.

A surprise consensus (but no formal agreement) by members of the Organization of the Petroleum Exporting Countries (Opec) to attempt to work out a plan to cut crude oil production at their next meeting in November revived the energy sector, giving stock markets a mid-week boost. Toronto’s benchmark S&P/TSX Composite Index, which is heavily weighted to natural resources, particularly energy, virtually mirrored the advance in crude oil prices on the week, as seen in the graph below.

The other main contributor to market volatility last week was a rumor that the German government was preparing to bail out banking giant Deutsche Bank AG over a proposed US$14 billion fine levied by the U.S. Justice Dept. to settle various mortgage securities probes. However, things cooled down by the end of the week, with all parties denying that any sort of bailout was in the works or indeed that Deutsche Bank was in a kind of stress to begin with. Deutsche Bank indicated its capital position was strong, that it was selling non-core assets, and that it would deal with the U.S. Justice Dept. on its own, indicating it would fight the fine, and would not pay the full amount in any case.

Power down. In other business news, Canadian tech company BlackBerry Ltd. (TSX: BB) powered down on its iconic smartphone last week, when it announced it would stop making the mobile phone handsets and get out of its money-losing hardware business altogether. Citing increasing competitive pressures and thin margins, BlackBerry CEO John Chen said that the production and distribution of the iconic BlackBerry smartphone brand would be licensed to outside producers, with BlackBerry focusing on software.

Power up. Energy utility Northland Power Inc. (TSX: NPI) got a boost last week when it announced it was actively seeking a buyer. With a value of about $4 billion, the company operates thermal and renewable energy facilities in Canada and Europe, and expects adjusted earnings before interest, tax, depreciation, and amortization to double by 2018 from last year’s $402 million. Share prices jumped about 2.8% on the week.

Brand power. Belgian beer giant Anheuser-Busch InBev SA (NYSE: BUD) (whose brands include Budweiser, Corona, Stella Artois, Beck’s) completed its takeover of British rival SABMiller Plc (OTC: SBMRY) as SABMiller’s shareholders voted overwhelmingly to accept the deal worth US$102 billion. SABMiller brands include Foster’s, Miller, and Pilsner Urquell. The combined company will continue under the AB InBev name.

Check Fund Library’s Market Activity page regularly for active updates on key market indexes and commodities.

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© 2016 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

 
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